BUSINESS TAXES

Topics:

• Nature and Concept• Types• Classifications

NATURE AND CONCEPT

Business tax is a tax imposed on the onerous

transfer of product, property, and service. Onerous

transfer means there is a monetary consideration

involved in transfer of goods or services between

the owner and the buyer. However, if the transfer

of goods or services without consideration (i.e., for

free) , the transfer is said to be gratuitous.

Transfer of Goods or Services

Onerous Transfer Subject

to Business Taxes

1.Value-added Taxes

2.Percentage Taxes

3.Excise Taxes

Gratuitous Transfer

Subject to Transfer Taxes

1. Estate Taxes

2. Donor's Taxes

TYPES OF BUSINESS TAXES

The business taxes named in the National Internal Revenue

Code (NIRC) or R.A. No.8424 , as amended, of the Philippines

are:

1.Value-added Taxes

Is a business tax imposed and collected from the seller

in the course of trade or business on every sale of properties

(real or personal) lease of goods or properties (real or

personal) or vendors of services. It is an indirect tax, thus, it

can be passed on to the buyer.

Value-Added Tax is imposed in the following:

• Sale of goods or properties in the ordinary

course of business.

• Sale of services and use or lease of properties

in the ordinary course of business.

• Importation of goods or properties whether or

not in the course of business or trade.

2. Percentage Taxes

Is a business tax imposed on persons or

entities who sell or lease goods, properties or

services in the course of trade or business

whose gross annual sales or receipts do not

exceed P750,000 and are not VAT-registered.

Percentage Tax is imposed in the following:

• Tax on domestic carriers and keepers of garages

• Tax on international carriers

• Tax on franchises

• Overseas communication tax

• Tax on banks and non-banks financial intermediaries

• Tax on finance companies

• Tax on life insurance premiums

• Tax on agents of foreign insurance companies

• Amusement taxes

• Tax on winnings

• Every stock broker who effected a sale, barter, exchange or

other disposition of shares of stock listed and traded through

the Local Stock Exchange (LSE) other than the sale by a

dealer in securities 

• Corporate issuer / stock broker, whether domestic of foreign,

engaged in the sale, barter, exchange or other disposition

through Initial Public Offering (IPO) seller in secondary public

offering of shares of stock in closely held corporations

3. Excise Taxes

Is a tax imposed on goods manufactured

or produced in the Philippines for domestic

sale or consumption or any other

disposition. It is also imposed on things

that are import.

Excise tax is imposed in the following:

• Alcohol Products

Distilled Spirits (produced from sap of nipa, coconut, cassava,

camote, buri palm or sugarcane and other raw materials)

Wines (sparkling wine, champagne, still wines, fortified wines)

Fermented Liquors ( beer, lager beer, ale, porter, and other

fermented liquors except tuba, basi, tapuy and similar fermented

liquors)

• Automobiles ( whether engine or gasoline fed , 1600 cc up to over

3001 cc engine displacement)

• Non Essential Products

Jewelry, pearls, precious and semi-precious, whether real or

immitation

Perfumes and toilet waters

Yachts and other vessels for pleasure or sports

• Mineral products

Gold and Chromite

Copper

• Indigenous Petroleum

• Tobacco Products

CLASSIFICATIONS OF BUSINESS TAXES